Pending Home Sales Index Crosses The 100 Barrier

We are selling more homes. Many reasons account for this:

1. prices are cheaper
2. mortgages are cheaper
3. rents are higher
4 distressed sales account for a large number of home sales
5. more buyers are testing the waters
6 deals like this won't last

May I say more? It is time to buy, and not because I work in the industry. Economics people, economics of our time.

After a series of worse-than-expected data last month, the housing market appears to be back on track.

The Pending Home Sales Index posted 101.4 in March, a four percent gain from the month prior and the index's highest reading since April 2010 -- the last month of that year's federal home buyer tax credit.

A "pending home" is a home under contract to sell, but not yet closed. The Pending Home Sales Index is tracked and published by the National Association of REALTORS® monthly.

The March report marks the index's first 100-plus reading in nearly two years.

To home buyers and sellers throughout New York , this is statistically significant because the Pending Home Sales Index is normalized to 100, a value corresponding to the average home contract activity in 2001, the index's first year of existence. 2001 was an historically-strong year for the housing market.

The March 2012 Pending Home Sales Index, therefore, puts current market activity on par with market activity from 2001.

You wouldn't know it from reading this week's papers, though. There have been stories about how the Case-Shiller Index put home values at new loans; and how the Existing Home Sales figures unexpectedly dropped off; and how the New Home Sales report was a laggard.

But this is why the Pending Home Sales Index can be so important.

What makes the Pending Home Sales Index different from those other data points is that the Pending Home Sales Index is a "forward-looking" housing market indicator.

Unlike most data which aims to tell us how the housing market performed at some point in the past, the Pending Home Sales Index attempts to tell us how the housing market will perform at some point in the future.

80% of homes under contract close within 2 months. Many more close within months 3-4. Therefore, on the strength of the March Pending Home Sales Index, we should expect a strong April and May nationwide.

If you're shopping for homes right now, consider taking advantage while the market remains somewhat soft. Mortgage rates are low and home prices are, too. It can make for a good home-buying conditions.

Everything is local, just like me. I know how much your house is worth. All you have to do is ask me!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Till next time

THE NEW YORK REAL ESTATE NURSE^sm  

Pending Home Sales Index Posts Second Best Month Since April 2010

After 3 consecutive months of growth, the housing market appears to have eased a bit in December. The trend remains flat over a longer period of time. We are undulating.

According to the National Association of REALTORS®, December's Pending Home Sales Index slipped 4 percent from the month prior. The index measures the number of homes under contract to sell nationwide, but not yet sold.

Despite falling below its benchmark "100 value", December's Pending Home Sales Index is the reading's second-highest value since April 2010 -- the last month of last year's home buyer tax credit program.

In other words, the housing market continues to show signs of improvement, propelled by low home prices and the cheapest mortgage rates of all-time.

Freddie Mac's mortgage rate survey put the 30-year fixed rate mortgage at an average of 3.96% in December -- a 75-basis point improvement from December 2010. This helps to make homes more affordable nationwide.

On a regional basis, December's Pending Home Sales Index varied :

• Northeast Region: -3.1 percent from November 2011
• Midwest Region : +4.0 percent from November 2011 
• South Region : -2.6 percent from November 2011
• West Region : -11.0 percent from November 2011

But even regional data is only so helpful. Like everything in real estate, data must be local to be relevant.

Throughout the West Region, for example, the U.S. region in which pending home sales fell the most, several states must have performed better than the regional average. And, undoubtedly, there were cities, towns, and neighborhoods that experienced marked market growth.

Unfortunately, the Pending Home Sales Index can't capture that data. Nor can it identify the markets in which home sales suffered. Let's wait for Case / Schiller to bring out the November score.

For today's Queens home buyers and sellers, therefore, it's important to understand your local market and the drivers of local activity. Reports like the Pending Home Sales Index can paint a broad picture U.S. housing but for data that matters to you, you'll want to look local.

For local real estate data, talk to an experienced real estate professional, like myself.

Till next time

The New York Real Estate Nurse

Pending Home Sales Slip In July; Creates Buyer Opportunity

After 3 straight months of gains, the Pending Home Sales Index slipped 1 percent in July. The monthly report is published by the National Association of REALTORS® and measures the number of home under contract to sell nationwide.

The Pending Home Sales Index is closely watched by Wall Street and analysts because it's a forward-looking housing market indicator. Unlike most housing market data, though, Pending Home Sales forecasts a future housing market event. In this case, the Existing Home Sales report.

In its methodology, the Pending Home Sales Index states that 80% of homes under contract close within 2 months, with most of the remaining home going to closing within Months 3 and 4.

We would expect home sales data to taper into the fall buying season, but this year, they may taper more than normal. This is because, in a separate report, the National Association of REALTORS® said that contract cancellation rates are running high.
As compared to a 4 percent contract cancellation rate in May 2011, June and July both registered 16 percent. This means that fewer homes tallied as part of July's Pending Home Sales Index will show up as "closed sales" this fall.

Contracts can be canceled for any number of reasons including more stringent mortgage guidelines, appraisals falling short of the purchase price, and changing mortgage loan limits.

For home buyers in the New York City area, the Pending Home Sales Index may represent an opportunity. Not only are fewer homes going under contract nationwide, but with cancellation rates spiking, sellers may be more willing to "make a deal". Remember, all is local.

Note, though, like all real estate, the pace at which homes go under contract is a "local" statistic; you can't assume national data applies to all markets equally. Your home market, for example, may out-perform -- or under-perform -- the national average.

For a closer look at what's happening on your street including the speed at which homes are selling, talk to a local real estate agent.

In the New York City area. I am your housing expert. I have all the housing statistics.

Till next time

The New York Real Estate Nurse